MORGANTOWN — The state Public Service Commission has given Mon Power until Oct. 22 to come up with a proposed scheduling order for the PSC to review Mon Power’s plan to end its Electric Energy Purchase Agreement with the Morgantown Energy Associates plant on Beechurst.
The proposed contact termination is subject to PSC approval. PSC said the scheduling order should include dates for additional testimony and exhibits from Mon Power that demonstrate the benefits and rate impact of the proposal, and for testimony by other interested parties.
Mon Power spelled out its plan in a Friday filing. That filing was part of an already existing energy rate case in which Mon Power proposes to lower residential bills by about 70 cents per month.
Citing various timing issues and the lack of information regarding the MEA proposal, the PSC elected to break out the MEA agreement into a separate case.
Mon Power must also file public notice about the new case in the newspapers throughout its service territory, according to the PSC order regarding the proposal.
“This informs the public of the filing and any potential rate impacts, and provides notice to anyone who may wish to intervene or submit positions in the case,” said Mon Power spokesman Jeffrey Straight.
Mon Power and MEA plan to terminate their contract effective Jan. 1, 2020, the same day the plant will be deactivated as a power supplier.
Asked if the PSC’s order will affect the timing, Straight said, “This may result in a schedule for the contract termination case that extends later into the year than the ENEC [energy rate] case, but the companies will cooperate with the commission and parties in both cases to try and obtain orders by the end of the year.
Mon Power has been purchasing electricity – about 50 megawatts – from the plant under an Electric Energy Purchase Agreement (EEPA) with MEA since April 1992. The contract was set to continue through April, 17, 2027.
But the contract was a money loser for Mon Power, the company explained in its ENEC filing. The prices dictated by the contract exceed the price of power Mon Power can buy from other sources and are expected to remain above those market rates.
The higher rates cost Mon Power customers about $70 million from 2014-2018, the filing says and will cost another $17.7 million above market rates in 2020.
But Mon Power could save that $17.7 million by terminating the contract, the PSC notes in its order, and see additional savings in future years.
So Mon Power and MEA owner Starwood Energy Group negotiated a $60 million contract termination agreement, effective Jan. 1. “Terminating the contract now [and paying MEA $60 million] can provide customers with significant savings when compared with allowing the contract to run until its termination in 2027,” Mon Power said in its filing.
The Dominion Post again contacted the public relations firm Starwood uses to handle questions, Abernathy MacGregor, to ask about the future of the MEA plant. Spokesman Tom Johnson said Starwood has no comment at this stage.
Following termination of the Mon Power contract, MEA will no longer supply electricity generated by its two CFB – circulating fluidized bed – boilers fired by coal and waste coal. MEA may continue using the CFB boilers to supply steam to WVU until it completes installation of equipment to replace them, at which time the CFB boilers will be retired.
In the meantime, MEA will also install an additional auxiliary natural gas boiler to meet its steam supply obligation, which continues through 2027.
The fate of the plant beyond that remains uncertain. Starwood previously said MEA and three other plants in its Excalibur Power Portfolio derive a significant majority of their revenue from power-purchase agreements, such as the one Mon Power is terminating.
Tweet David Beard @dbeardtdp Email dbeard@dominionpost.com
